Baby Boomers Might Just Wreck America

October 14th, 2016 No Comments   Posted in General Finance

Maybe it’s not the Republicans’ fault. Or the Democrats’. Or even the do-nothing Congress’s. Maybe the nation’s biggest problem is a generation of leaders that have fallen hopelessly behind what’s happening in the real economy.

Clinton vs TrumpBill Clinton became the first baby-boomer president when he took office in 1993, and whoever wins this year will be the fourth president from the baby-boom generation, loosely defined as those born between 1946 and 1964. Republican Donald Trump was born in 1946, the same year as Bill Clinton. Democrat Hillary Clinton was born in 1947. Both of this year’s candidates came of age during the glory years of the US economy—the 50 years following World War II, when American wealth exploded and living standards skyrocketed.

But as they age and retire, the boomers are leaving the US economy in far worse shape than they inherited it. They also tend to apply 20th-century thinking to new types of problems that require a different mindset to solve. This year’s presidential race highlights the whole nation’s disgust with those unsolved problems and leaders applying last year’s ideas to next year’s challenges.

Trump and Clinton are both unpopular, with favorability ratings well below 50%. That’s dismal for the two individuals each party has chosen as its best hope for the future. At the height of their influence over the country, baby boomers are offering cynical slogans instead of solutions, and the two candidates representing them both seem to be motivated by self-interest above all.

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Panicked Brits Rush To Buy Gold Bars

While we have to wait two more days to find if the scaremongering behind Brexit’s “Remain” campaign has succeeded in terrifying enough residents to vote against exiting the EU, one group has been delighted by a Breferendum that has been defined by fear, terror and even more fear: sellers of gold and personal safes.

According to the Telegraph, worried British savers (yes, they still exist in this time of QE and age of NIRP) are scrambling to buy gold bars and “stuffing them in safes at home, data suggests, as fears mount that a Brexit-induced financial meltdown could be just around the corner.”

The paper cites Google search data for the term “home safe” which is running 61% higher than the level at which it peaked in November 2008, the point of the financial crisis, and is now higher than at any point since. In other words, whether intended or not, locals are more terrified of the outcome of Thursday’s vote than the near-collapse of the financial system in the aftermath of Lehmans’ failure.

Royal Mint, Britain’s official producer of gold and silver coins and bars, said sales have soared by 32% over the past month, with customers rushing to buy sovereign and Britannia bullion coins and signature gold bars in particular. While our readers hardly need an explanation, the Telegraph notes that “in the event of a major meltdown it is common for savers and professional investors buy physical gold and silver to protect their assets, as historically the value of precious metals rises, as the value of stocks and shares falls.”

But it gets better: ever the opportunists, the newspaper cites “experts” who warned that buying gold bars to store them at home is “nonsense” and instead investors who wish to preserve their nest-eggs “would be better off investing in gold investment funds, which offer better value for money.

 Ben Yearsley, investment director at Wealth Club, a financial advice firm, said: “Gold bars are very poor value for money and you run the risk of losing them or having them stolen at home. If you’re going to buy precious metal you might as well buy a gold or silver investment fund, where you will get much better value for money due to economies of scale.”

You read that right: the end of British civilization as we know it may be at hand, at least according to David Cameron, and financial advisors are, well, advising to buy not physical gold – which may be “lost” or “stolen” but rather gold buy gold ETFs: supposedly there “you will get much better value due to economies of scale.”

It was not clear what the hell that statement means, but it sure is hilarious. Yes: please invest in paper gold which will be promptly corzined in a worst case scenario, when ETFs suddenly realize there is no actual deliverable, and stay away from evil physical.

Because it could get lost.

Idiots aside, Laith Khalaf, a senior analyst at Hargreaves Lansdown, Britain’s biggest stockbroker said that “gold has been a popular choice recently as markets have been worrying about the prospects of global economy, and gold works as a store of value, and a hedge against catastrophe.” Or just the outcome David Cameron is certain will be unleashed if more people vote to leave the EU on Thursday.

So buy gold if you listen to David Cameron, just please don’t buy physical: it’s not like London vaults have any of it left: “the Royal Mint also recently announced a new service which allows the purchase of gold bars in personal pensions, which probably generated some interest in the yellow metal, though a cheaper way to
access the market is through a gold exchange traded fund.”

Pell Grant Shocker

September 22nd, 2015 No Comments   Posted in Financial Literacy, General Finance

NEW YORK (MainStreet) — Students who used their Pell Grants to attend Corinthian Colleges as the for-profit college chain was being shut down find that they are not only out on the street, but lost have their Pell eligibility in the bargain.

Now a bill making its way through Congress, the Pell Grant Restoration Act of 2015, plans to change the game so former Corinthian students will be eligible for Pell at other schools. Pell Grants are available to low-income students for expenses such as tuition and fees, books, room and board. The maximum Pell award for the 2015-16 academic year is $5,730.

The 1965 Higher Education Act (HEA), the font of all Federal student aid, provides for the discharge of Federal student loans if a school closes before students complete their programs. However, it does not provide for a reboot of a student’s Pell Grants eligibility in the event of a school closing. Students can only receive Pell for six academic years or 12 semesters. Students closed out of Corinthian due to its bankruptcy may not have enough Pell eligibility to finish at another school.

The Pell Restoration Act will restore Pell Grant eligibility for students who attended an institution of higher education that closed due to Federal violations. The Act, introduced by Senator Barbara Boxer (D-Calif.) and Representative Bobby Scott (D-Va.), is supported by 42 other members of Congress.

“In spite of the warning signs, the Federal government did not step in soon enough to prevent Pell Grant funding from being wasted on the failed Corinthian Colleges system,” said Senator Dick. Durbin (D-Ill.).

“It is only fair that the students who were misled into failing programs have their Pell Grant eligibility restored,” Durbin added. “We shouldn’t be punishing students for the bad actions of for-profit college CEOs.”

Corinthian Colleges, Inc. filed for bankruptcy amid widespread charges of fraud that critics say were enabled by the Department of Education which provided its students with Federally-backed loans and Pell Grants. ED has signed on to the Pell Grant Restoration Act.

“Students who are defrauded by an unethical college or who lose their academic credits when a school closes are entitled to student loan relief, but under current law they cannot restore their eligibility for Pell grants,” said Secretary of Education Arne Duncan. “As a result, they may not be able to afford to start over somewhere else. I commend Congressman Bobby Scott and Senator Barbara Boxer in their leadership on this issue.”

“Corinthian College, Inc., wasted hundreds of millions in taxpayer dollars and left thousands of students in debt without any degrees to show for it,” said Senator Chris Murphy (D-Conn.), who signed on to the legislation. “While we absolutely need to hold abusive colleges and their executives accountable and create stronger protections to prevent any similar misconduct in the future, restoring access to Pell Grants for wronged students will help ensure that students receive the aid they need to continue their education.”

“Students have spent too much time and money trying to achieve a higher education, something that was supposed to help them get on their feet,” said Sarah Audelo, policy director for Generation Progress. “Instead, they were defrauded. We’re glad to see Congress working to right this wrong so students can pursue a degree that will help them support themselves and their families.”

Applying Financial Aid Just Got Easier

September 20th, 2015 No Comments   Posted in Debt, Personal Finance

Applying for financial aid can be a pain. But the federal government will start allowing students to file their applications three months earlier, aiming to make the messy process a little easier to handle.

Starting next year, students can file the free nationwide financial aid application (known as FAFSA) as soon as October 1, using tax data from the previous year. The FAFSA determines whether a student is eligible for federal aid — like Pell grants and loans — as well as scholarships from their state and school. It’s based on a family’s income and how much the school costs.

Currently, students have to wait until at least January to file. And they must base their answers on income information that will be submitted on tax forms due in the coming April. That can require some stressful guesswork that might have to be readjusted later.

The hope is that students will learn earlier how much money they’re getting to help pay for college. If that doesn’t seem like a big deal, put yourself in the shoes of a high school senior trying to decide where to go to college next year. You don’t really know how much it’s going to cost without factoring in financial aid. But those notices don’t often go out until acceptance letters are sent in the spring. By the time you have all the information, you have just weeks to decide where to enroll. Talk about a pressure cooker.

The move, announced by President Obama on Monday, will give families an earlier and more accurate idea of their anticipated financial aid and college costs, according to the National Association of Student Financial Aid Administrators. The group has urged the administration to make the change for years.

Even if students file their FAFSA in October, it’s up to the school to decide when to notify them of their award — which could still be in the spring. But hundreds of colleges have already committed to align their aid time lines with the earlier FAFSA, according to the White House.

“This is a good step in the right direction, but it’s still very difficult for a student to apply for financial aid,” said Nat Smitobol, a former admissions director a Skidmore College and New York University who now works for the admissions counseling service firm IvyWise.

About 2 million students who are currently enrolled in college would be eligible for a Pell Grant, but didn’t get the aid because they never filed the FAFSA. Most Pell Grant recipients come from families who earn less than $30,000 a year. The maximum award is $5,775.

Even without filling out the form, students can get a general idea of how much financial aid they might receive by using an online calculator. A new tool released by the White House last week, called the College Scorecard, can also estimate how much you’ll have to pay to attend a specific school, based on your family’s income.


September 18th, 2015 No Comments   Posted in Investment

If you have enough cash to put aside and are looking at a more organized and disciplined investment option. An investment option that would fetch you better returns and gives you regular income, with little or moderate risk involved, it would be wise to opt for a debt fund. And if you are hunting for a fund that is systematic in nature and allows only small amounts to be allocated to equity or balanced fund as per the risk appetite. So, now if all of the above or most of the requirements echo the same thought in your head for your investment plan, then Monthly Income Plan (MIP) should be the right choice for you.

To define what Monthly Income Plans are it would be apt to put that these are debt oriented funds that reap income as dividends. MIPs are mutual funds that invest in debt instruments like corporate bonds, government securities, debentures, etc., which form the larger share of the investment to say about 80% and the rest of it being equity and cash. Now as far as the returns are concerned, the same can be received basis your choice of return duration, which can be monthly, quarterly, semi-annually or annually.

Now like mentioned above, there’s option for MIP to earn income as dividends or do you want them to give you growth, you must make a choice. In dividend option you receive dividends that are tax-free as the company pays out dividend distribution tax before it reaches the hand of the investors. Whereas in case of growth options, instead of dividends the money keeps on growing within the mutual funds and will reap you benefits only once the funds are redeemed.

Now apart from knowing what are monthly income plan and the two types of returns that can help you choose your investment path, there are several other things to know and consider when investing in Monthly Income Plans.

What should compel an investor to go for monthly income plan?

  • If you are an investor who is looking for regular income say monthly, quarterly, semi-annually or annually, must opt for MIPs.
  • If you aim better returns than fixed deposits, you must opt for MIPs.
  • If you are salaried person or are nearing your retirement, you must opt for MIPs.
  • If you want medium term low risk option to park your lump sum funds, you can try MIPs.

What are the broad features of MIPs?             

  • Dividends are rolled out only on the profits earned and not from the capital invested. So, in case of growth of NAV from Rs. 10 to Rs. 10.3, dividends will be given out on only 0.3.
  • Don’t get the name of the fund wrong and expect it to fetch you income monthly, as there is no guaranteed monthly income. While the plan intends to declare regular dividends, due to unfavorable conditions and performance it might not be able to do so.
  • Despite being debt oriented funds, there can be negative return situations which can put their safety in jeopardy in extreme cases.
  • Debts are influenced by interest rates inversely. So, when interest rates fall, NAV of bonds rise. And when interest rates rise, the NAV falls. Equity bit of the fund structure at these times help maintain the fluctuation in returns.

Author Bio:

Harsimran Tikka, a blogger & literature fanatic. Loves doing analysis on any new financial product that comes into market and provides her views. She has written several articles focusing on mutual funds, investment etc.

China Just Screwed You. Unless…?

August 28th, 2015 No Comments   Posted in General Finance

At Rich Dad, we are always telling people they need investments they can control.

Relying on the government or your employer is never safe or secure.

Neither is relying on the markets.

Markets have cycles and patterns but they are also victim to the whims of a lot of different forces.

This week China was the force changing the market.

The leaders in China needed to do something to bolster their economy. They chose to fire the first volley in a monetary conflict by letting the value of the yuan drop.

What does this do?

It makes their products much cheaper for other countries to import. It also makes non-Chinese products much more expensive to the Chinese people.

This triggers a trade conflict.

Many are predicting the U.S. will devalue the dollar to help their products sell in an attempt to stave off a huge unemployment surge.

Historically this has created a domino effect forcing countries to devalue their money. It becomes a dash to see who can devalue their money fastest.

This will cause huge unemployment swings, manufacturing swings, and national chaos.

The scariest part?
It will be up to the Fed and the Chinese government to try to repair. That’s like putting your homeowner’s claim in the hands of the guy who burnt your house down.

Oddly enough, this volatile landscape highlights one of the greatest things about stock trading: it is highly liquid and highly agile.

A savvy investor can use the stock market to capitalize on just about anything going on anywhere in the world.

Because stocks are so liquid (easy to obtain and sell) and agile (they can move in any direction immediately) an educated investor can get into or out of any deal within seconds. This flexibility will allow the educated investor to make changes as fast as the chaotic markets change.

One more great thing about stocks.
Just about anyone can get in the stock market. It is very scalable. You do not need a lot of money to get in. But you do need knowledge.

With knowledge you can profit greatly from a volatile market. Without knowledge you will be the market’s victim. As Warren Buffett said,

“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”

Remember, knowledge is what makes a good investor, and only a good investor can profit from the world’s foolishness.
Robert Kiyosaki